ASIA PACIFIC

OFFSHORE REPORT
139
Issue
Mid-March 2019

Westwood
Global Energy
Group
 Westwood
Global Energy
ASIA PACIFIC
Group OFFSHORE REPORT
In this Issue
Market Summary • New Fixtures • Tenders
Surveys/Pre-Quals • Prospects • Mobilizations
Shipyard News • Scrapping, Cold Stacking, Reactivations
Rig Sales • Stacked Rigs • Jackup New Builds
Floater New Builds • Drilling Contractor News
Operator News • Bankruptcy • M&A Activity
Corruption • Country File • Industry News

Summary of Events
Three new jackup fixtures all made to regional contractors but no new floater awards. PV
Drilling have been the most successful contractor this year having picked up six (6) contracts
since January – and in the process virtually abandoning Vietnam for Malaysia reportedly fed
up with the length of time it takes PetroVietnam to approve drilling programs.

Four (4) new tenders issued, all for work with operators in Malaysia where Petronas Carigali
are also currently seeking to charter four jackups and a tender assist unit. Malaysia far
outstrips other South East Asian countries for jackup demand, with six (6) tenders currently
nearing award and a further eleven (11) market surveys issued for prospective work.

A slew of new charters begun in last few weeks with Ensco 8504, Ensco 107, Naga 6, Naga 7,
PVD I, PVD II, Tom Prosser and Maersk Deliverer all spudding new contracts.
Two departures from the region this month, Transocean’s new build Transocean Norge and
Borr’s Groa to the North Sea and West Africa respectively.

KeppelFELS picked up another juicy order for a mid-water harsh environment semi with
AWILCO exercising the first of its three options for a second Moss CS60 ECO MW design unit.

Editorial Enquiries: Ian Craven

icarusconsultants@gmail.com

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Regional Jackup Rig Fixtures

Velesto jackup Naga 7 has succeeded in filling the gap between its current charter with Shell
Malaysia which ends this month and its return to Shell in September. The rig has been picked
up my Murphy Oil for 2 wells in Block SK-314 offshore Sarawak. The 120-day program will start
later this month in immediate continuation of the Shell work and keep the rig busy until late July.
It will then return to Shell in September for phase II of the drilling program in SK308 for a further
three wells and will next be available in March 2020.

PV Drilling are hoovering up just about every contract going at present – and in the process
abandoning Vietnam for Malaysia. Following an award by Sapura Energy to PV Drilling II and an
extension on PV Drilling III by Repsol, now Hibiscus have awarded a 4+4+6 well charter to PV
Drilling I, all in Malaysian waters. This makes six contract awards to PVD since the beginning of the
year, with a seventh, by Than Long yet to be approved by PetroVietnam. PV Drilling I is set to start
its 180-day charter with Hibiscus in the North Sabah Enhanced Oil Recovery PSC in April or May
2019 after the rig’s current contract for Murphy E&P in Vietnam. The good news is that Vietnam
will inevitably open up to international contractors with the domestic rigs having flown the nest.
The bad news is that the various high profile corruption scandals have slowed down approvals for
Field Development Plans with PVD deciding not to wait but to chase contracts outside of Vietnam.
Operators who have announced drilling plans for 2019 include Vietsovpetro, Eni, Hoang Long,
Than Long and Cuulong all of whom have yet to contract a jackup with the latter two still waiting
approvals for drilling campaigns that were supposed to being in April.

Medco Energi have finally confirmed its winner for its 2+1 well drilling campaign in Block B in the
Natuna Sea offshore Indonesia and the award as expected has gone to sole bidder COSLBoss. COSL
has been waiting since November for this award. The rig is currently in New Zealand drilling for
OMV and is due to return around May when it will then begin the 90-day firm charter for Medco.

New Surveys/ EOI’s/ Pre-Quals

Vietgazprom has issued a market survey seeking a mid-water floater for 2 wells to be drilled in
Q4 this year. The block locations were not specified but VGP hold blocks 111/04, 112, 113, 129,
130, 131 and 132 and since the water depths quoted were between 81m and 101m this suggests
one of blocks 111/04, 112 or 113, the others being deeper water. The operator drilled in 2012 in
the shallow water blocks using drillship Energy Searcher and last drilled in deepwater block 129 in
2015 using Deepsea Metro 1. Unless VGP can secure the Hakuryu 5 for early 2020, this could see
the resurgence of stacked 1981 built drillship Valentin Shashin (former Deep Venture) which has
been idle in Vietnam since July 2017 or else a more expensive deepwater or ultra-deepwater unit.

As predicted in the last issue of the newsletter, West Natuna Exploration, a subsidiary of
Conrad Petroleum are seeking expressions of interest for a pre-qualification exercise for a
forthcoming tender for a jackup for one firm well plus and an option in the Duyung PSC in the
Natuna Sea offshore Indonesia. Commencement is scheduled for September with water depths on
71m although WNEL are understood to be seeking a long legged jackup. Well duration is between
30-40 days. WNEL last drilled in 2017 using COSLSeeker.

ConocoPhillips Australia have sent out a Request for Information on jackup availability to perform
a well abandonment program in the Bayu-Undan field in the Joint Petroleum Development Area in
the Timor Sea. The 450-day program is scheduled for Q1 2021. Water depths are 78-108m. Last
year COPA utilized Noble jackup Noble Tom Prosser and has also used Ensco 104 in the past.

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New Tenders Issued

Tender Rigs (TAD’s) are suddenly in demand. Enquest in Malaysia have issued a tender for a tender
assist rig for a 90-day program likely offshore Peninsular Malaysia for a 90-day term beginning in
July this year. Enquest are the operators of the former EPMI Seligi and PM8 fields, traditional
TAD developments and last used Sapura Esperanza in Q2 last year. Three contractors are reported
to have participated, Sapura Drilling, E-Drill are certain to have bid and the third may be Atlantica.

And another TAD opportunity in Malaysia. Petronas Carigali have issued a tender for a 4-well
drilling campaign off Sarawak to commence in August-September. Duration is said to be around
120 days. Sapura Drilling semi-tender Sapura Berani may be favourite for this as it is already
contracted to PCSB and just happens to finish its current charter in July assuming all options are
exercised. PCSB also have Sapura T-9 on long term contract until January 2020 with options until
January 2022.

After fulfilling part of its intended 2019-2020 drilling program in Block SK408 offshore Sarawak,
Malaysia by contracting PV Drilling jackup PV Drilling II for six wells, Sapura Energy have issued
a “limited” tender for the rest of its planned workscope consisting of six firm wells plus two option
wells including four gas development wells lasting 145 days, two exploration/ appraisal wells over
80 days and two optional gas development wells for 100 days. Originally Sapura had considered
potentially including this workscope with the PV Drilling II workscope but the rig negated this plan
as it is contracted back in Vietnam after completing its Malaysian program. It is highly likely that PV
Drilling will offer PV Drilling VI which is available in June and this maybe the reason why the tender
is described as “Limited.”

Murphy Oil Malaysia have issued a tender for a deepwater floater capable of drilling in 1500m
water depths for its 2019-2020 drilling campaign in the Patricia field in SK309 and in deepwater
Block SK-2A offshore Sarawak and Sabah. Commencement is November this year and the program
is listed as four development wells plus an exploration well option plus another option for five more
development wells. A unit with dual activity, DP3 and built after 2007 is required and must not have
been stacked for more than six months. Murphy had issued a pre-qualification for this program
back in December quoting its firm duration as 270 days.

Other Tender / Survey Related News

Malaysia
IPC’s difficulties in sourcing a jackup were described in the last issue of the newsletter and
their re-tender for a long legged jackup for six firm wells plus two options to be drilled in Block
PM307 has now closed. Having failed to secure a “hot” rig IPC have now opened up the tender
to warm stacked rigs as well as new builds. The program, originally to have commenced by
now, is set to begin in Q2 though very likely at the end of the quarter at the earliest. The 210
day firm program will take place in the Bertam and Keruing fields.

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Petronas Carigali have now clarified their jackup requirements for 2019 through a series
of pre-qualifications after having previously issued a series of market surveys containing
limited information on when or where the program were to take place. The operator had
issued surveys in December last year and two in February this year. The three programs are
now detailed with the first being for three exploration wells over 230 days plus two options
taking a further 78 days beginning in mid-August for which a 400ft rig is required. The second
campaign in for the Bayan re-development which has eleven firm wells scheduled for 278
days plus two option wells which would add a further 66 days. A 350ft rig is required for this
campaign which is set to begin in August. Lastly a third jackup, rated for 400ft, is required for
a five well drilling campaign for Samarang off Peninsular Malaysia with an expected duration
of 210 days. Commencement is also targeted for August this year and a 400ft rig is required.
Malaysia’s Velesto will be hopeful of picking up some if not all of these campaigns having Naga
2, Naga 4 and Naga 6 all potentially available for PCSB’s start dates. The operator also has
an outstanding tender for another jackup as yet not fulfilled, a 2+2 well program for Sepat for
which tenders were submitted in December.

In addition to the drilling programs described above Petronas Carigali now have another
requirement and have issued a pre-qualification for a jackup to perform two firm wells in
its Temana Re-development Project offshore Bintulu in Sarawak, an enhanced oil recovery
development. The 110-day program is set to begin in the latter half of May and is in 30m water
depths. Recognizing that jackup availability of “hot” rigs is diminishing, PCSB have opened up
the pre-qualification to new builds and even cold stacked rigs.

Shell continues to press Ensco to reduce its rates for the moored floater tender for 6 firm
wells that was issued in October last year and for which Ensco MS-1 has been the constant
frontrunner. Its competition is likely to be Deepwater Nautilus which comes available in April.
The operator has now extended the bid validity for the 260-day program which is to take place
offshore Sarawak until May with a start-up date moved from April to June. Meanwhile Ensco
MS-1 remains idle in Singapore while repair work is underway.

Indonesia
Repsol subsidiary Talisman Andaman have now delayed its pre-bid meeting until 15
March. The operator required a deepwater floater for one exploration well to be drilled in
the Andaman III PSC offshore Aceh province in North Sumatra. The operator requires a 5th
generation MPD capable unit to drill in 1500m water depths beginning in August with the well
expected to take 50m water August with the well expected to take 50 days without testing.
Market reports suggest that Vantage and Seadrill were pre-qualified to bid although Vantage
now have a contract for their drillship Tungsten Explorer in Egypt. Award is expected in May.

After having been sole bidder and having completed commercial negotiations with Pertamina

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Hulu Energi Nunukan Company, Apexindo, having offered jackup Rani Woro, have not
received a confirmation of award and indeed it is now being reported that PHENC have failed
to get approval to develop its assets meaning the three-well exploration/appraisal program
may either be cancelled of postponed. The one-year program had been due to commence in
April. Rani Woro has been idle since April last year.

There has been no progress on the tender for a mid-water floater issued by Black Platinum
Energy last December. The 1+1 well program in 110m water depths is to take place in the
North Sokang PSC in Natuna Sea where the Dara East gas field is located. The operator has
plans to develop the field and was last reported to be looking for partners ahead of formal
submission of the development plan and may also be looking for a farm-in the help defray
drilling costs.

Not a great deal of progress has also been occurring for Pertamina Hulu Energi Offshore
Southeast Sumatra’s (PHE OSES) tender for a jackup for a two year charter for the South
Sumatra PSC which is scheduled to begin in April or May. Back in January it was reported that
COSL was the sole bidder proposing GustoMSC CJ-46 jackup Well Target 3 although COSL
have denied this is the rig offered. It has been reported that COSL and PHE OSES remain in
contract negotiations with no progress so far. Well Target 3 is currently working in China for
CNOOC until around April or May.

Hoang Long JOC have received partner approval for their two development/Appraisal well
jackup drilling program scheduled to begin in November and for which they issued a tender
last month. The two wells, with options for two more, are to be drilled in the Te Giac Trang
(TGT) field in Block 16-1. There is a possibility for a further two wells as well further work
including 19 well interventions and a gas lift upgrade. The firm program is expected to last 80
days.

Mobilizations
Ensco UDW semi Ensco 8504 has departed from Singapore and is now being wet towed to Japan
ahead of its one well charter with Japex in the Yufutsu field. It is expected to arrive in Tomako0mai in
Hokkaido on 28th March and expected to begin its charter in early April. The program is scheduled
for around 100 days meaning the rig will mobilize back to Singapore at the end of July, a voyage
expected to take 50 days.

COSL mid-water harsh environment semi COSLProspector has reached and now departed Las
Palmas in the Canary Island on its self-propelled way to New Zealand from Norway. It will next
stop in Port Elizabeth in South Africa before arriving off New Plymouth before the end of April. The
rig has a 120 day plus 60 day options charter with Tamarind Resources in the Tui field offshore

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Taranaki. It will next be available in late August or in October if the option is exercised.

Ensco jackup Ensco 107 has just left Dampier and is on its way to the Stag field offshore Australia
for its one well charter with Jadestone Energy. The 35 day well will take the rig through until
end April after which it is again available. The rig last worked for Quadrant Energy until early
February and is a contender for Chevron Australia after the Jadestone campaign.

Another Ensco jackup on the move is Ensco 115 which will shortly begin its mobilization back to
Thailand for its 10-month form charter back with Mubadala Petroleum in the Manora field.
The operator has options on the rig which if all exercised would keep the rig occupied until March
2021. It has only worked for Mubadala in Thailand, on and off, since it was delivered in 2011. It
completed its last charter in September last year and has been in Johore since then undergoing
routine maintenance, re-certification and contract preparation work.

Borr Drilling has lined up HLV OHT Albatross to transport jackup Groa from Singapore to Nigeria
for its 2+1 year charter with ExxonMobil which is expected to begin in April. The vessel is expected
to arrive in Singapore around 19 March where the Groa has been stacked since its delivery from
PPL shipyard in August last year, and loading will begin immediately upon arrival.

Transocean’s new build UDW harsh environment semi Transocean Norge has finally departed the
region and is now heading to Norway for its maiden charter with Equinor. The former West Rigel
was built at Jurong Shipyard in Singapore and was delivered in February after which it carried out
further sea trials and contract preparation work. The contract is expected to begin in July.

Prospects
In Australia Jadestone plans further work this year in the Montara and Skua fields beginning in the
second half of the year. An infill well for Montara and three well interventions for the Skua field are
planned. Jadestone has contracted Ensco jackup Ensco 107 for a 1+1 drilling campaign its Stag field
where work has already begun and will require another jackup for the Montara/Skua work.

Following a report last January that PTTEP in Thailand would soon be in the market for a jackup,
it has now emerged that the operator is planning to issue a tender for a long term jackup program
before the end of this month to commence in the last quarter this year. It is likely to be a 3-year term.
PTTEP is expected to ramp up its rig plans now that it has been confirmed as operator of both Erewan
and Bongkot. Presently they only have TAD EDrill-1 on contract until November this year.

Petronas Carigali has stated that new exploration and development drilling requirements will
increase the annual average of jackups working off Malaysia to between 6 and 10 units during the
next three years. As of March 2019, there are nine working jackups, with another two preparing
to begin contracts within the next month. PCSB says it expects an average of 16-19 jackups will
be operating in Malaysian waters from 2019-2021. In addition there are currently six tenders for
work in Malaysia yet to be awarded as well as ten market survey or enquiries for further work in
the country. PCSB also expects the annual average number of tender rigs (TAD’s) to remain at
between 2 and 4 units. At present, three of the six units in the country are working.

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Shipyard News
Hyundai Heavy has now signed an official contract with Korean Development Bank to takeover
Daewoo Shipbuilding. A Holding Company is to be created by HHI to control its shipbuilding
business with HHI having the controlling stake with 26% and KDB holding 18%. And the second
largest shareholder. The major shareholders of DSME including HHI and KDB are to inject $1.3bn
of capital into the company. The combined shipyard becomes one of the largest shipbuilding
conglomerates in the world with over 20% of the world’s orderbook. However the takeover did not
comes without protests having faced strong opposition from the unions of both yards worrying
that there will now be massive redundancies. Indeed hundreds of workers fought police in front of
the KDB building attempting to enter the building to disrupt the signing ceremony.

Shanghai Waigaoqiao Shipbuilding (SWS), a subsidiary of CSSC, has taken over the yard previously
operated by Hong Hua Offshore in Qidong Jiangsu. The new entity, Waigaoqiao Offshore Qidong
will focus on offshore equipment manufacturing and offshore engineering. Hong Hua has suffered
heavy losses over the last two years and have been unsuccessful is disposing of its entire offshore
business and have now entered into an agreement with SWS to co-operate on offshore business.
SWS currently has nine jackups under construction that it is trying to dispose of as well as
constructing a FPSO.

Scrapping/Retirements
Now that Shelf Drilling have doubled their premium jackup fleet with the recent acquisition of two
new builds and a bareboat agreement for two more new builds they have begun to weed out some of
their older and idle units. They have announced the sale of 1976 LeTourneau Class 84 rig Key Gibraltar
which is to be converted to a MOPU. The rig has been idle since January 2016 and spent most of this
century working mostly in Thailand before being mobilized to Bahrain in 2016 to be stacked.

In addition Shelf has removed three other elderly jackups from its active fleet and put them up for sale.
1980 built Mitsui Modec 200-C-45 design Rig 124 has spent most of its active life in Egypt and been idle
since August 2017 and cold stacked since August last year. Another Egypt based unit, 1980 built Offshore
Company Jubilee Class Modified jackup Comet has also been stood down having been idle since May
2016. Lastly 1982 built LeTourneau 116-C design Adriatic X also exits the fleet. It has been idle since
September 2015 and is currently in the UAE although spent much of its active life in West Africa.

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Rig Sales & Purchases

Former Odfjell UDW drillship Deepsea Metro 1 has now arrived in Yalova in Turkey after its sale
to Turkish Petroleum (TPAO) and mobilization from South East Asia. It now sports a new name,
Yavuz and is expected to work in the Turkish Mediterranean in due course.

Vantage Drilling have now officially taken over

ownership of former Apexindo operated BMC Pacific
Class 375 jackup Soehanah. The rig, purchased for
$84m was acquired from Ship Finance International
and is to be re-named Pearl Driller in due course and
is currently bare-boat chartered to Apexindo until the
end of the rig’s current contract. Pertamina Hulu
Energi Offshore Northwest Java (PHE ONWJ)
have the rig chartered until the end of June this year
with an option for a further year yet to be exercised.

Jackup New Build News

Noble have accepted delivery of new build jackup Noble Joe Knight from PaxOcean shipyard in
Batam Indonesia and have now moved the rig to Jurong Shipyard in Singapore where it will undergo
further commissioning and testing as well as contract preparation for its 3+1 year charter with Saudi
Aramco to begin in Q3 this year. This is the second GustoMSC CJ-46 design jackup that Noble has
purchased from PaxOcean.

Borr Drilling have reported that they are in advanced negotiations for multi-year contracts for four of
their ten remaining idle units stacked in Singapore. No further details have been released but the rigs
involved are two BMC Pacific Class 400 units Grid (former Animus) and Gersemi (former Supremus)
which are expected to start work min mid-2019. The other two are both former Transocean KFELS
Super B Class new builds Saga (ex-Transocean Cassiopeia) and Skald (ex- Transocean Centaurus)
whose charter if awarded would begin in early 2020. The latter two could be in line for Chevron
Thailand? All four units were delivered in 2018.

COSCO Dalian shipyard have reported that all construction work and commissioning on their three
remaining jackups have been completed and they only await the owners to accept delivery. All three
are LeTourneau Super 116-C design units, Energy Engager and Energy Encounter ordered in 2013
by Northern Offshore and Dynamic Momentum also ordered in 2013 by Dynamic Drilling. Another
COSCO yard, in Nantong, have one jackup yet to be delivered, KS Orient Star 2 ordered by KS Drilling
in 2011.

News has slipped out of China regarding the fate of the second and third Zentech R-550D design
jackups Alliance 2 and Alliance 3. Both were ordered in mid-2015 by TSC Group subsidiary Alliance
Offshore Drilling to be constructed at CSSC Huangpu Wenchong Shipyard following the apparent
successful sale of the first unit Alliance 1 to Petrolor Offshore services of Hong Kong. However this
sale collapsed and although the rig was later sold to Harmoni Drilling in Indonesia (now Harmoni
Victory) the difficulties in finding a buyer put the delivery of the next two units in jeopardy. Now
news has emerged that construction work on the second unit has been suspended for some time and
construction of the third unit was never begun as it was terminated at the engineering phase and will
not be built.

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Floater New Build News

Sete Brasil has pushed back bid submission date for bids to be submitted for its tender for four
UDW floaters to 28 March. Sete is selling four newbuild UDW floating rigs, KFELS design semis
Urca and Frade and Jurong Espadon design drillships Arpoador and Guarapari. Requirements
for buying the rigs are that only drilling contractors with deepwater experience can bid and they
must be able to sign contracts with Petrobras. Bidders can submit a bid for all four units, but bids
must be for at least two units from the same yard. The successful companies will be responsible for
completing construction of the rigs. The last published status of the rigs from Sete in 2016 showed
that construction progress stood at 89.96% for the Urca, 84.76% for the Arpoador, 74.21% for
the Guarapari and 69.09% for the Frade. The semis are located in the BrasFels shipyard in Rio de
Janeiro, while the two drillships are at the Jurong Aracruz shipyard in Espirito Santo.

Awilco certainly has confidence in the mid-

water North Sea floater market which has
seen the mid-water fleet decimated over the
last four years. After having ordered a harsh
environment mid-water semi from KeppelFELS
Singapore back in February last year with
options for three more, the Norwegian driller
has now exercised the first of those options for
another Moss CS60 ECO MW design unit. The
Awilco Rig 2 is being built at a cost of $455m and
is expected to be delivered in March 2022. The
rig will be similar to Awilco Rig 1 and equipped
and certified for drilling on the Norwegian
Continental Shelf, including in the Barents
Sea, in water depths up to 5,000 ft. Options
for two more units remain to be exercised in
March 2020 and March 2021 respectively. The
first rig is due for delivery in March 2021 and
is currently under construction with the lower
hull being built at Keppel Nantong in China and the upper hull at Keppel FELS in Singapore.

Drilling Contractor News

Ensco are understood to be hopeful that Inpex will extend the charter of deepwater semi Ensco
5006 which is working in the Timor Sea offshore Australia until August this year. The rig has been
contracted to Inpex since February 2015 in the Ichthys field and an extension of around 4-months
is believed to be possible which would see out the year for the rig. The 1999 delivered Trosvik
Bingo 8000 design rig, formerly called Deepsea Stavanger, Marine 700 and Pride North America
may be lined up for scrapping after completing the Inpex contract.

Velesto jackup Naga 6 has begun its charter with PTTEP in Block SK410B offshore Sarawak. The
HPHT well is expected to take around 70 days to drill and will be next available late in May. The rig
completed 16-months on charter to Petronas Carigali in early February.

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Meanwhile another Velesto jackup Naga 7 is expected to complete its current charter with Shell
in the E6 field drilling Phase 1 of the fields’ development offshore Sarawak by the end of March.
The rig will return to Shell for Phase II for 3-wells which will keep it busy until February 2020.
Velesto has succeeded in filling the gap with a 120-day charter with Murphy Oil also in Malaysia.

PC Myanmar has exercised the first of two options on JDC’s mid-water semi Hakuryu 5 and the
rig has already completed its firm well and has already spudded the first option. This keeps the
rig occupied until the second half of April with one option outstanding. Upon completion it will
mobilize to Vietnam for Rosneft followed by mobilization to Indonesia for Medco both of which
will keep the rig working until late 2019.

Pseudo drilling contractor and offshore asset operator Ezion Holdings, who completed a re-
financing exercise mid last year, have announced it is under voluntary trading suspension due to
being in advanced negotiations with a potential strategic investor. No final agreement has yet been
reached as the potential investor is still working on securing lenders. Ezion, renowned for their
secrecy and for issuing limited information on its activities, operates a fleet of liftboats, service rigs
and who own veteran drilling rigs generally bare-boated to other parties. The latter includes the
Valiant Driller and Victory Driller bare-boated to Dynamic Drilling and working for ONGC in India,
Prime Exerter in Turkmenistan and bare-boated to PrimePoint through subsidiary Teras Offshore
which will begin working for Dragon Oil later this year and two idle units, the wonderfully named
Noah’s Ark in the Middle East and Endeavour, Spirit of Independence stacked in South Africa.
There may be others but Ezion is coy about revealing such information. It was reported last year
that Ezion had been in discussions with China Merchants shipyard in China to form a joint venture
when CMHI had around 19 abandoned jackups to find a home for but this has now been reduced
to 5 after Shelf’s recent foray into rig purchasing and several bare-boat agreements reduced the
abandoned units significantly.

Two PV Drilling jackups have just commenced new charters. PV Drilling I is now on location in
Block 15-01/95 for Murphy Oil and has commenced its one well charter which is expected to
keep the rig busy until mid-May. The rig has a potential 100-day charter with Hoang Long JOC
also offshore Vietnam but this has yet to be approved by the operator’s partners. Meanwhile jackup
PV Drilling II has departed from Kemaman Supply Base and is now on location at the East Belamut
A platform offshore Terengganu Malaysia and has spudded its 2-in-fill well charter with Sapura
Energy which will keep the rig occupied in Malaysia until end July. It will then return to Vietnam
for a one well infill program for JVPC in Block 15-2 offshore Vietnam.

Japan Drilling jackup Hakuryu 11 is expected to complete its charter with Hoang Long/Hoan
Vu offshore Vietnam in the next week or so. It will then mobilize to Batam in Indonesia and a short
yard stay at Pax Ocean shipyard will commence a 6-month contract for Premier Oil in the Natuna
Sea in early April. JDC are in contract talks with an operator in Vietnam for a 250-day development
drilling program thereafter and it is hardly a secret that this is Idemitsu who require an extra-long
legged jackup of which Hakuryu 11 is the only available unit in the region.

PTTEP Myanmar have announced that Noble’s UDW semi Noble Clyde Boudreaux has made a
commercial gas discovery in a well drilled recently in the Zawtika field. The rig has an 8-well firm
contract due to finish in July and PTTEP holds options for another 7-wells although these would

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not begin until September leaving the rig with a 2-month gap between the firm period and the start
of the options if exercised.

Noble’s jackup Noble Tom Prosser in now on location in permit WA-45-R for Santos in Australia
and has begun the first well in its 230-day charter in which it will drill three appraisal wells including
one at the Dorado discovery. The rig arrived from Darwin where it has been idle since November
last year. It has follow on contracts with CarbonNet and ExxonMobil in South Australia starting
in October this year.

PTTEP in Myanmar are to release Energy Drilling’s tender assist rig EDrill-2 this week. The rig
has been working for then operator in the Zawtika field since December 2015. The contract was
originally expected to carry on until October this year. EDrill-2 will mobilize to Singapore upon
release and is likely to have been offered to Petronas Carigali and Enquest for further work in
Malaysia.

Velesto jackup Naga 5 has completed its charter with Petronas Carigali which it began in August
last year and has entered Malaysian Marine Heavy Engineering shipyard (MMHE) in Johore for its
SPS and while it awaits its next charter. Velesto are in the unusual position of having three jackups
currently idle, including Naga 2 and Naga 3, though that is not expected to last for very long given
Petronas Carigali’s hunger for jackups this year.

Maersk UDW semi Maersk Deliverer has completed its mobilization to Eni’s location in Block 11-
106 in the Joint Development Area in the Timor Sea off Timor Leste and has begun its charter with
Eni. The one well charter is expected to keep the rig busy until May. Eni hold an option for a further
well also of 60-days duration.

Operator News

Malaysia
The regional NOC trinity, Petronas, Pertamina and PetroVietnam are in arbitration
and adjudication proceedings with Malaysian contractor MISC with the latter claiming
compensation for the early termination of two MOPU’s by the NOC joint venture who were
operators of Block D30 and the Dana field offshore Malaysia. MISC had been awarded two
10-year lease contracts but the contracts were cancelled several years early. MISC is claiming
$105.2m for unpaid lease rates, payment for completed variation orders, early termination
fees, re-imbursement of demobilization costs, service rates and other associated costs. Action
in Malaysia’s High Court is ongoing.

Vietnam
SOCO International has commissioned a 2D seismic survey for its moderate to deepwater
blocks 125 and 126 off central eastern Vietnam with work to start around mid-year. In
October 2017 SOCO signed a production-sharing contract for the two blocks together with
PetroVietnam and SOVICO Holdings, with SOCO holding a 70% operated interest in each
block and the first exploration well is potentially scheduled for 2021-2022.

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Thailand
Front end engineering and design work is now underway for KrisEnergy’s Rossukon
oilfield development in Block G6/48 offshore Thailand. The development concept involves a
production platform connected to a leased floating storage and offloading vessel. The location
of the platform has now been established and KrisEnergy have been granted an extension
of the PSC term until November 2021 to bring the field on-stream after having delayed the
project during the low oil price period. Meanwhile KrisEnergy has also received approval
from the Department of Mineral Fuels to relinquish more than half of its G10/48 reservation
area, though the Wassana production area on that block remains unchanged. This follows an
unsuccessful exploration well drilled around 15km west northwest of the Wassana field by
Borr Drilling jackup Mist earlier this year.

Ophir Energy currently has a new 12-slot wellhead platform (Bualuang C) under construction
in Sattahip which is expected to be installed in the Bualuang field in Block B8/38 around mid-
year. Phase 4 of the field development will be carried out in two phases. Phase 4A will include
three new producer wells and four workovers drilled from existing platforms while Phase
4B will see drilling on the Bualuang Charlie platform with first oil set for October this year.
Drilling is set to begin in July this year with Seadrill jackup West Cressida set to return with a
firm period believed to be for 10-wells keeping the rig busy until March 2020.

Australia
Although much of Carnarvon Petroleum’s focus and energies have been centered on the
Dorado oil discovery, the company has been progressing re-development of its Buffalo field
off Timor Leste. Drilling in the field, discovered in 1996 but shut in in 2004, is now planned
for Q1 2020. One well will be drilled and then followed by two further production wells in
Q3 2021. The development concept includes a wellhead jacket, topside, flowlines, umbilicals
and a floating production, storage and offloading vessel. Meanwhile Carnarvon is working
on finalizing a production sharing contract with Timor Leste, a consequence of the field having
come into Timor Leste jurisdiction after the revised maritime agreement with Australia.

PTTEP’s recent exploration well drilled by Transocean UDW semi GSF Development Driller
I in permit AC/P54 in the Timor Sea has been pronounced as a gas discovery. The well will
now be incorporated into the development of the Cash and Maple field which spans AC/
P54 and adjoining permits AC/RL-4 and AC/RL-7. Meanwhile the rig is undergoing general
maintenance and contract preparation for its next charter with Chevron in the Gorgon field
beginning in early April.

IPB are currently seeking funding for a proposed exploration drilling campaign in permit WA-
424-P. The commitment well, the Idris prospect, is due to be drilled in Q1 2020 and with water
depths at 137m a floater will be required. The operator is now working on the Environmental
Plan. A flow test of a subsequent horizontal well will assist in assessing the extent of a previous
discovery well and the oil flowed will be transferred to a leased tanker and sold with the
proceeds applied to repay the debt funding of the drilling program.

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Indonesia
Ophir Energy is to proceed with the development of the Meliwis satellite field in the Madura
Offshore PSC. Discovered in 2016 and drilled by Apexindo jackup Rani Woro, Meliwis is just
11km south of the producing Maleo field and the development concept is for a single wellhead
platform tied back to Maleo. The development will extend the life of the Maleo and Peluang
fields. Ophir has a 77.5% stake in the production sharing contract as its local partner had
declined to participate in the drilling of the exploration well that led to the discovery. A gas
sales agreement has also already been signed. Ophir issued a market survey for a jackup
last January seeking a rig to drill a horizontal development well off the Meliwis platform
commencing in January 2020.

Conrad Petroleum’s development plan for the Mako field in Duyung PSC in the Natuna Sea
has been approved by Indonesia’s Ministry of Energy & Mineral Resources. The plan involves
a small wellhead platform with compression facilities that will initially host four wells, with
another four wells to be subsequently drilled during the life of the field. Conrad noted
that the PSC had been converted from the cost recovery scheme to the gross split scheme,
outlining the benefits of the latter. “The gross split scheme significantly streamlines the
budgeting and approval process for operations within the PSC area, enabling contractors such
as Conrad to increase their operational activities. Furthermore, the lower tax burden prior to
commercial production provides us even more incentive to launch additional operations in the
near future.” Duyung is near the West Natuna
Transportation system which transports gas
to Singapore. In June 2017, operator West
Natuna Exploration Ltd, a subsidiary of
Conrad Petroleum drilled the successful
Mako South-1 exploration well using COSL
jackup COSLSeeker and earlier this month
sought expressions of interest for another
jackup to drill one firm well with an option well
in the field commencing in September. Water
depths in the field are around 70m.

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Country File
Confusion in Indonesia on whether a Ministry of Energy and Mineral Resources regulation
prioritized existing contractors (operators) over Pertamina when considering extensions to
existing PSC’s has led to the case being taken to the Supreme Court who have now ruled that
the national oil and gas company Pertamina has priority rights and not existing contractors.
Anyone familiar with the labyrinth like Indonesian regulations will well understand how they
can be open to different interpretations. Drilling contracts translated into Bahasa certainly
bear this out.

A Malaysian Press Report reported that the Economic Affairs Minister has been quoted as
stating that the country’s oil and gas reserves are expected to last another 10-years and that
Petronas has to carry on searching for new reserves within and outside the country to
ensure the sustainability of the petroleum resources in Malaysia. This drew some comment
from a well-known regional analyst who pointed out that in fact Malaysia has been a net oil
importer since 2014 and despite being the world’s third largest exporter of LNG it imports
more oil than it produces. He also pointed out that it is a little known fact that Petronas signed
a 20-year contract with Cheniere Energy in the USA to purchase LNG cargoes, a strange thing for
the 3rd largest LNG exporter to do bringing cargoes from the USA to re-sell to Asian customers.
Rumours are that some of the LNG trains in Bintulu, Malaysia are excessively expensive to run, and
that it is cheaper for Malaysia to buy LNG from the USA to re-sell to their customers but this has
never been verified.

Rig Utilization Rates

Jackup utilization rate up 6 points to 53%, Floaters up 5 points to 72%.
Tender rates drop 6 points to 55%.

Note: out of 36 idle competitive rigs a total of 9 are contracted for future work
50%
40% 60%
30% 70%

20% 80%

10% 90%

0% 100%
Regional Jackup Utilization Rate
50% Marketed Supply 50%
40% 60% 40% 60%
30% 70% 30% 70%

20% 80% 20% 80%

10% 90% 10% 90%

0% 100% 0% 100%
Regional Floater Utilization Rate Regional Tender Utilization Rate
Marketed Supply Marketed Supply

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Breakdown of all active rig types in the Asia Pacific by country

China Japan Sakhalin
Myanmar 1x Floater 2x Floater
1x Tender
Thailand
2x Floater Warm Stacked
2x Jackups
Vietnam 25x Jackups
4x Tenders
3x Jackups 6x Floater
1x Floater 1x Floaters standby/contract
JDA 7x Tenders
1x Jackup
Malaysia Brunei
8x Jackups 2x Jackups Cold Stacked
2x Floater 1x Floater 6x Jackups
Departed Region in 2019
3x Tenders 2x Tenders 9x Floater
6x Jackups
3x Tenders
Incoming to Region in 2019
2x Jackups Scrapped in 2010-2018
1x Floater Indonesia 8x Jackups
6x Jackups 34x Floater
1x Floater 6x Tenders
Fleet Strength (Active) = 83
49x Jackups (excl. cold stacked)
2x Mid-water floaters
Timor Leste Australia New Zealand
4x Deepwater floaters
1x Floater 1x Jackups 1x Jackup
12x Ultra deepwater floaters
3x Floater
18x Tender rigs

Composition of Regional Fleet Utilization of Regional Fleet

Semi-Tenders, 7, 8%
Cold Stacked, 17, 17%
Tender Barges, 11, 13%
Warm
Stacked, 36,
35%
Jackups, 49,
Ultra Deepwater, 58%
12, 14%

Working, 49, 48%

Deepwater, 4, 5%

Mid Water, 2, 2%

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